It's not world famous for it's homes or real estate. Folks outside Silicon Valley know it as the birthplace of the iPhone. Apple, Symantec, and a very large portion of HP --- to name a few --- call it home. To locals, Cupertino is synonymous with the school system. The Cupertino Union School District has 24 elementary and middle schools, 19 of which are ranked by the California Department of Education as 10 out of 10 statewide.

And that doesn't account for the elite Monta Vista High School, as well as Lynbrook High School or Homestead High School (as part of the Fremont Union High School District shared with Sunnyvale and other cities) which all rate 10 out of 10 statewide as well.

The real estate in the Cupertino part of Silicon Valley commands a premium over other cities in the area. The darker lines on the chart show what the median price of condos and townhomes, and single-family homes in Cupertino. The faded lines show what the median home prices are in Santa Clara County as a whole.

The difference between the two types of lines is the premium you pay in housing prices to live in Cupertino. How much is that premium and how has it changed over the last decade?

Cupertino Home Prices Commanding Consistent Premiums

Steady state. Or at least as steady as real estate gets in June. Over the month of June in past five years, Cupertino home prices have remained above Santa Clara County prices, to the point where the premium has been consistent between 35% and 39%. This is lower than the premiums commanded between 1998 and 2002 when single-family homes were over 50% --- as high as 71% --- more expensive than the median across Silicon Valley.

Too much of a premium and the local micro-climate bubbles relative to the area. Cupertino was itself ahead of the curve in 1998 and again in 2000 with a local peak of $880,000 for a median home that year. Since its last price decline in 2003, single-family homes in Cupertino have been tracking the aggregate median without much fluctuation.

Given the talk in the news about home market collapses around the country, many home buyers are risk averse, preferring to minimize the amount of their potential loss rather than maximize their potential gain. A vast majority of people in this part of the Silicon Valley market cycle fall into this category.

Demand for high-quality townhomes, condominiums and houses in Cupertino has not been completely met because of a strong decrease of 23% in homes available between June 2007 and last year. Inventory is at levels not seen as low since June 2000, when it was at 72, and multiple offers on good properties are still common.

For my clients who want the strongest schools for their children, Cupertino makes an equally strong case. For my clients who want a solid foundation for their next home, Cupertino has steady indicators and foundation in education. If these are factors you value, then it represents a comparatively safe decision in Silicon Valley. There are places that aren't like that, and you can find one example at the end of this article about a neighborhood in San Mateo.